What is maximum profit, a. What is your maximum profit? At

What is maximum profit

Assignment Help Business Management

Reference no: EM13971324

Use the information in the table to answer the following questions. Create one spread per question from the prices in the chart. Create only one option spread for each question. For example if you were going to create a covered write you might want to buy 100 shares at $91 and write a May 100 call against it. Please use a different option than the example.

Calls		Puts
May-85	$7.50	May-85	$1.50
May-90	$4.20	May-90	$3.10
May-95	$1.90	May-95	$5.90
May 100	$0.70	May 100	$9.80

Create a vertical spread

a. What is your maximum profit? At what point do you reach the maximum profit? What happens as the stock increases in value?

b. What is your maximum loss? At what point do you reach the maximum loss? What happens if the stock continues to decrease in value?

c. Compare a covered write to a vertical spread. What is the difference in return? What is the difference in risk?

d. Is this a low or high volatility spread? What does volatility mean?

Reference no: EM13971324

Questions Cloud

How it should be applied by law enforcement officers. : Explain how the concept of justice relates to the field of criminal justice, emphasizing how it should be applied by law enforcement officers.

Create one spread per question : Use the information in the table to answer the following questions. Create one spread per question from the prices in the chart. Create only one option spread for each question. For example if you were going to create a covered write you might wan..

Difference between the castle doctrine and stand : Determine the fundamental difference between the castle doctrine and stand your ground types of criminal defenses. Justify the validity of each, and provide one (1) example of each to support your response

What factors do you think are contributing to the demise : 1. What factors do you think are contributing to the demise of OPEC?

What is maximum profit : a. What is your maximum profit? At what point do you reach the maximum profit? What happens as the stock increases in value? b. What is your maximum loss? At what point do you reach the maximum loss? What happens if the stock continues to decrease ..

Explain why the fasb chose the settlement rate : What alternative rate, or rates, might be preferred by opponents of the settlement rate? Why?

Loans and equilibrium nominal interest rate : Using the loanable funds theory, show in a graph how the following events will affect the supply and demand for loans and the equilibrium nominal interest rate:

Present value investments assumption : Using the zero net present value investments assumption for the perpetuity period, calculate the value of the perpetuity (terminal value) under the residual income model under the following assumptions.

User Account

All Pages